Virgin Media 2009 Annual Report Download - page 27

Our license agreements provide for an annual royalty of 0.25% of certain consumer, business and
content revenues, subject to a minimum annual royalty of £8.7 million in relation to our consumer and
content operations, excluding Virgin1, and £1.5 million in relation to our business operations. With
respect to Virgin1, we pay an annual royalty of 0.5% of revenues received by that channel, subject to a
minimum of £100,000. As part of the agreement, we have the right to adopt, and have adopted, a
company name for our parent, Virgin Media Inc., over which, together with the name ‘‘Virgin Media’’,
we retain worldwide exclusivity. We also have the right to use the ‘‘Virgin Media Entertainment’’ name
for our premium TV distribution operations in Luxembourg.
Employees
At December 31, 2009, we had 12,107 employees, of whom 10,939 were full-time and 1,168 were
part-time employees. We also had 1,355 temporary employees. Approximately 12% of our employees
are covered by agreements with the Communication Workers Union, or CWU, and the Broadcasting,
Entertainment, Cinematograph and Theatre Union, or BECTU. These agreements are terminable by
either the relevant union or us with three months’ written notice. Except for these arrangements, no
other employees are covered by collective bargaining or recognition agreements. We believe we have
good relationships with our employees, CWU and BECTU.
ITEM 1A. RISK FACTORS
Our business, financial condition or results of operations could be materially adversely affected by any
of the risks and uncertainties described below. Additional risks not presently known to us, or that we
currently deem immaterial, may also impair our business.
Risks Relating to Our Business and Industry
We operate in highly competitive markets.
The markets for broadband internet, television, telephony and business services in which we
operate are highly competitive. We face significant competition from established and new competitors
in each of these markets, and believe that competition will intensify as technology evolves. For example,
distribution of entertainment and other information over the internet, as well as through mobile phones
and other devices, continues to increase in popularity. These technological developments are increasing
the number of media choices available to subscribers. In addition, continued consolidation within the
media industry may permit more competitors to offer ‘‘triple-play’’ bundles of digital television, fixed
line telephone and broadband services, or ‘‘quad-play’’ bundles including mobile telephone services.
Many of our competitors are part of multi-national groups, and some may have substantially greater
financial resources and benefit from greater economies of scale than we do.
In order to compete effectively, we may be required to reduce the prices we charge for our
services or increase the value of our services without being able to recoup associated costs. In addition,
some of our competitors offer services that we are unable to offer. Any increase in competitive
pressures in our markets may lead to a decrease in our average revenue per user, increased costs,
increased customer churn or a reduction in the rate of customer acquisition, which could have an
adverse effect on our business, financial condition, results of operations and cash flows.
The sectors in which we compete are subject to rapid and significant changes in technology, and the effect of
technological changes on our businesses cannot be predicted.
The broadband internet, television, telephony and business services sectors are characterized by
rapid and significant changes in technology. Advances in current technologies, such as VoIP (over fixed
and mobile technologies), 3D TV, mobile instant messaging, wireless fidelity, or WiFi, the extension of
local WiFi networks across greater distances, or WiMax, LTE, internet protocol television, or the
25